Week Ahead Analysis: 6th February

According to some analysis, Compared to last weeks news releases, this week in the forex markets will be a relief to investors as high impact data is scarce. The RBA is forecast to hike interest rates by 25 basis points this week, but investors will be keen to see if the RBA Chairman Lowe will discuss the recent increase in the Consumer Price Index (CPI). Inflation in Australia grew in Q4 from 7.3% to 7.8% which would be a concern for the RBA who is looking to hike rates to 3.35%.

In other news we can expect key central bank speeches from the Federal Reserve Chairman Powell and FOMC member Williams, as well as the Bank of Canada Governor Macklem.

The strength meter shows us that the Great British Pound (GBP) was the weakest currency and the Australian Dollar (AUD) was the strongest currency. The USD technically hasnt changed trend on many charts despite the recent bullishness so the strength meter will be a week behind on this recent strength we have seen.

USD Index

The USD Index found support at the key level of 101.50 with the weekly candle closing as a bullish engulfing. This can lead to price moving higher, however, typically after a large move like this the week that follows can see a short term pullback or even a range week form. If the price continues to trade to the upside, we could assume the price is going to test the resistance at 103.75.

AUDUSD

The AUDUSD will be one to watch going into this week as the RBA is forecast to hike interest rates. The H4 chart shows us how aggressive sellers were at the highs around the 0.7100 level. If this momentum continues we could expect a move down to the support of 0.6875. If the RBA uses hawkish language in their statements we could see the price trade higher towards the lows around 0.7060.

GBPUSD

The GBPUSD price fell from the highs of 1.2452 down to the 1.2050 in a 400 pip move. If this sentiment is to remain then the price is likely to trade down to the support of 1.1850. If we see the price rally this week we could be on the lookout for bearish trading patterns for price continuation moves.

XAUUSD (GOLD)

The price of Gold also fell this week in line with the USD strength. If that does continue into this week we could be looking for short opportunities. The price has traded through the key support levels of $1920.00 and $1875.00 with little reaction suggesting the price could trade even lower towards $1800.00. If the price can retrace some of the bearish move we may be able to look for short trading patterns for opportunities to trade the price lower.